RubyGems nightmare due to 2 installs

I have a recurring problem with my RubyGems install atm… actually
there are 2 of them, one in /usr/local/lib and the other in /usr/lib

I think it ended up that way after upgrading ruby to 1.8.6.

I have somehow managed to get around problems, but each time I start a
new Rails project, on the server it gives me this error (usuallly on

Rails requires RubyGems >= 1.3.1 (you have 1.3.0). Please gem update --system and try again.

Everytime I try and install it installs in /usr/local/ … which is
obviously not where Rails is looking.
I have tried a few things, searched here and googled, but nothing I try
seems to work so far…

Any tips much appreciated, need to squash this problem once and for all,
without risking currently running rails sites.

Many thanks